If you’re in your 40s, 50s, or 60s, you’re probably hoping to find the Fountain of Youth and be ready to feel like a kid again in your happy, lucky retirement. As you plan, it’s a good idea to retire responsibly like an adult.
Merriam Webster’s dictionary added “adult” as a verb as well as a noun.
Being an adult means being responsible, trustworthy, self-sufficient, and even knowing when is the right time to throw these rules out the window. These include cleaning up, paying bills on time, and – I want to add – planning for retirement.
Here are 10 ways to know if you have a reliable plan for retiring like an adult.
1. Know what your retirement income will be
Hiding from the truth won’t help you when it comes to your retirement income. You need to know how much and from what source.
How much do you get from Social Security? Do you have a pension? pension? Do you work part-time any time? And the important thing is how much you need to withdraw from your savings each month.
NewRetirement Retirement Planner makes it easy to know your annual retirement income. You can also run different scenarios to determine the retirement withdrawal strategy that best suits your needs and value.
2. Retirement benefits are below income
The most important rule of personal finance, the principle of spending less than you earn, also applies to retirement. In fact, it’s more important than ever. If you spend too much money, you run the risk of actually running out of money.
The trick is that you really need to make good forecasts and know exactly how much you’re going to spend each year over the next 15-30 years.
Here are nine tips for predicting your retirement spending.
3. Even better?Guaranteed lifetime income to cover basic expenses
Guaranteed lifetime income is income that you can receive as long as you live. Social Security and most pensions are the most common examples of guaranteed lifetime income.
Many personal finance experts recommend that when you retire, you have enough guaranteed lifetime income to cover your baseline retirement expenses (expenses you need to live on). Baseline spending includes housing, medical care, and food.
You have two options for earning enough guaranteed lifetime income:
- Reduce your baseline spending to stay below your guaranteed income.
- Increase your guaranteed lifetime income through the purchase of a life annuity or other strategies.
Experiment with different retirement planning scenarios to find what works for you.
And here are 18 different retirement income strategies to explore.
4. Paid off debt
One of the biggest threats to retirement today may not be too little savings, but too much debt.
After making real progress against debt during the pandemic, consumer debt is on the rise. According to the latest data, total household debt in the fourth quarter of 2022 increased by $394 billion (2.4%) to reach $16.90 trillion.Quarterly report On household debt and creditCredit card balances rose $61 billion to $986 billion, topping the pre-pandemic high of $927 billion. Home loans rose to $11.92 trillion, auto loans to $1.55 trillion and student loans to $1.60 trillion. Also, the proportion of current debt moving into delinquency is increasing for almost all types of debt.
The most adult way to deal with debt is to pay it off before you stop working. However, it’s not always possible, and sometimes it’s better than paying off your mortgage debt (at a lower interest rate). Find out why you might want to keep your mortgage after you retire and 13 tips for managing your retirement debt.
5. Planning inflation
The current inflation rate is still high and you’re probably worried about your grocery bill. High inflation can have a devastating effect on retirement spending power. As Sam Ewing said:
“Inflation is paying $15 for a $10 haircut and it was $5 when you had hair.”
Sam Ewing
When you are working, your wages generally rise as the cost of goods and services rises. It’s not as big of a concern as the latter case. Inflation literally robs you of your income if you are living off your savings after retirement.
The good news is that Social Security and some pension programs (though less prevalent) adjust incomes for inflation. The bad news is that if you stop investing and saving to live in retirement, the value of your money will decline dramatically over time. In the future, we will need more money to sustain our lives.
How asset allocation can protect you from the ravages of inflation
Retiring like an adult means having a good working knowledge of the interdependence of various instruments in the economy and how they affect one’s financial planning. increase.
When you retire, you need some way to ensure that your savings will outstrip inflation. If inflation is 5% for him and he is earning 5% on his investment, his financial situation is flat. You haven’t lost money, but you haven’t moved forward either.
However, as we age, our tolerance for investment risk decreases. Also, while you want to increase your savings (or at least not lose value), you should look to safer investments (such as bonds) that may have lower returns.Proper asset allocation creation you It is not an easy task as you need to understand your personal risk tolerance, macroeconomic factors and investment horizon.
A financial advisor can help you navigate the design of an asset allocation strategy that outperforms inflation while managing risk.
Work with NewRetirement Advisors Certified Financial Planners™ Professionals to identify and achieve your investment goals. Set up a free discovery session.
6. Have plans for other potential risks
The future cannot be predicted. However, adult retirement planning is meant to mitigate the potentially harmful economic consequences of long-term health events, natural disasters, car accidents, stock market crashes, or other unpredictable future events.
Having the right insurance product and a dedicated emergency fund can protect you.
7. Evaluate your plan at least quarterly
Planning for retirement isn’t something you do once and never think about again.
When you retire like an adult, you’ll need to maintain, update, and adjust your plans. He recommends reviewing the details at least once a quarter and updating them as you and the economy change.
NewRetirement Retirement Planner saves your information so you can easily make changes and review your plan.
8. Have a responsible plan for investing your savings
Investing for retirement is not just about getting the best possible return. A responsible retirement investment plan aligns when and how you need to access your money with your need for growth and security.
You can do this yourself. However, working with a financial advisor who has deep expertise in stocks, bonds, and other potential financial instruments can also help.
NewRetirement provides fiduciary advice from independent Certified Financial Planners™ for a fee only. Consultation is done by phone or video call.
9. Created an estate plan
Estate planning is a term widely used to describe a variety of end-of-life planning issues. The estate plan should include:
- Opportunity to manipulate your assets for tax efficiency and maximum wealth for both you and your heirs
- A detailed description of what you want to do when you die – a plan for your internment and the payment of your assets and property.
- Instructions on what you would like to do if you were alive but unable to care for yourself or make decisions
Check out the 11 documents you need for a reliable estate plan.
10. You have a dream and a purpose
Without a retirement plan, many retirees feel a vague sense of accomplishment and restlessness, wanting something more but don’t know what it is. While it’s important to focus on the financial side, the personal side of your retirement plan is just as important and can ultimately guide how you use your retirement assets.
Check out the following resources to help you understand what to do after retirement.
Make sure your retirement plan is responsible, reliable, self-sufficient, and sometimes a rule-breaker!
Use the New Retirement Planner to start adult!
